KeyBanc upgraded ZG to "overweight"
Shares of online real-estate marketplace Zillow Group Inc Class A (NASDAQ:ZG) are down 0.8% in premarket trading, despite receiving a bull note from KeyBanc. The analyst raised ZG's rating to "overweight" from "sector weight" and set a $100 price target -- a 26.3% premium over Friday's close -- citing potential tailwinds from an improving housing market.
Zillow stock has gained 40% over the past 12 months, yet 11 out of 25 analysts still rate it as a "hold" or worse, leaving room for additional upgrades that could fuel bullish momentum. On a year-to-date basis, ZG stock holds a nearly 12% lead. The stock’s most recent rally stalled just above $82, near its Nov. 29 three-year high of $83.67. Meanwhile, ZG's 10-day moving average remains a key technical support level.
An unwinding of pessimism could boost Zillow stock, as options traders are more put-biased than usual. The stock’s Schaeffer's put/call open interest ratio (SOIR) of 1.01 ranks in the 99th percentile over the past year, signaling bearish sentiment that could unwind.
Moreover, ZG stock's options are reasonably priced, with a Schaeffer's Volatility Index (SVI) of 60%, sitting in the 29th percentile of its annual range. This suggests low implied volatility, making it a compelling time to consider options trading on Zillow stock.